Commentary on Political Economy

Friday, 14 September 2012

The Inexhaustible Michael Pettis

As friends who visit this site surely know by now, we are unstinting admirers of Professor Michael Pettis (see his blog at www.mpettis.com). So much so that, given that alas time is limited for all of us, we have preferred to abandon commentary on current politico-economic affairs in favour of more "theoretical" pursuits - for the simple reason that we think that Pettis's blog does the job so well that there is really no reason to duplicate much of what he has to say. To be sure, Pettis is no "closet Marxist" of whatever hue. But it is fair to say that his analyses of politico-economic issues are impregnated with the astoundingly perceptive "realism" that distinguished the work of great analysts from Marx to Keynes to Minsky and onwards.

So whilst we apologise to our friends for maintaining our focus on "fundamental" matters - on the foundations of a new critique of political economy, and indeed of bourgeois theory and science -, we also strongly suggest that our friends visit Pettis's site for the sharpest critical analyses of present-day capitalism (with special focus on China, of course).

Just briefly, friends will recall (and they can check throughout our site for the actual record) that we had long predicted a few things that have turned out to be prophetic: - the "stagnation" of Western capitalist economies in the wake of the GFC (global financial crisis), the decline of bond yields in the US (on the grounds that holders of capital, - particularly the Chinese beastly variety who are now abandoning their country in droves! - had "nowhere else to go"), the continuation "indefinitely" of "quantitative easing" by the Federal Reserve (to keep the US dollar low against other currencies and re-launch US industry and weaken other bourgeoisies, especially the Chinese dictatorship), and the imminent crisis of the "unbalanced" Chinese export-oriented, investment-driven economy (meaning investment in infrastructure through the repression of domestic demand and exploitation of Chinese workers to the benefit of Western workers and above all Chinese and Western capitalists).

One other major prediction we made was that Germany would have to choose "how it preferred NOT to be paid" in the context of the EU crisis - either through inflation, or through outright default by the PIGS.... And this is precisely what is happening. The question is, however, whether the varieties of QE undertaken by the Fed and the ECB will not be counterproductive in the face of the implicit rivalries between and within the US and EU bourgeoisies.... Forgive us for being pessimistic about this, but we think that only a veritable "New Deal" of Rooseveltian proportions will save the bourgeoisies (Western and Asian) from their own rapacity. To quote Bob Dylan (from "Subterranean Homesick Blues") - "Look out, kid! The world's in a bid!" For all of us, (contra Timothy Leary) it is time to "turn on, tune in, and change the world".

(On this point, it is well to quote from Nouriel Rounini's most recent piece [if you pardon the French!] highlighting precisely the inability of capitalist leaderships to accept that "the nature of the game" is changing and that not austerity but a new social pact is needed:

All these predictions are coming to pass, and we ought to give ourselves a pat in the back for that. Yet, given our other interests, it is always difficult to cover the ground of events as minutiously and competently as does Pettis. Once again, we encourage friends to visit his excellent site.